2023 had been a tremendous year for investments, and most of my clients had a reasonable positive return. As we step into 2024, it’s important to look ahead and plan our financial strategies wisely.
In my pursuit to bring you the most relevant and practical financial advice, I’ve spent considerable time reviewing various industry forecasts from top investment firms.
Among these, I found that the one from the Fidelity Global Asset Allocation (GAA) Team is the most interesting and relevant to many Canadians. It directly covers the top 11 questions commonly asked by investors. These questions are at the heart of what’s on many investors’ mind. You may click here to read their insights
Quick Summary on the Fidelity 11 Questions for 2024
1) Why would I buy a balanced fund over a GIC?
A balanced fund has a wider opportunity set of asset classes that has historically led to stronger long-term risk-adjusted returns.
2) What is your highest conviction overweight?
The USD against the CAD. This is because the GAA Team expects the CAD to depreciate relative to the USD and also because the USD is a reliable buffer against equity market drawdowns.
3) What is your highest conviction underweight?
Canadian bank stocks. The GAA Team expects another credit cycle is coming for Canada, given high-interest rates and high Canadian debt levels.
4) Can the economy stick to the (soft) landing?
The likelihood of a US soft landing has increased, but in Canada, it will be much harder to execute.
5) Is this the year that bonds come back?
With attractive yields and a low likelihood of further rate hikes, the outlook for bonds has improved.
6) Where is inflation heading?
As long as the labour market remains tight, wage growth will stay strong and inflation will stay higher than central bank targets.
7) When will the Bank of Canada cut rates?
The market is pricing in cuts by the spring, but the GAA Team thinks that’s a bit too soon. That said, they do believe Canada will have to cut before the Fed.
8) Why has Canadian productivity been so poor?
One factor is housing. Housing is where the resources of the economy have been directed, to the detriment of overall productivity.
9) How big is Canada’s housing shortage?
It’s not nearly as big as it’s commonly made out to be. The real issue is restoring affordability in the housing market.
10) How are you allocated outside of Canada?
Our Canadian underweight funds modest overweights to the US, EAFE, and EM equities.
11) Will the USD lose its reserve currency status?
It is unlikely. As an extremely liquid and fully convertible currency representing more than half of total foreign exchange reserves, the bar to replace the USD today is very high.
When it comes to investments, it’s important to build a portfolio that is suitable according to your objective, risk profile and time horizon. If you are looking for investment advice from a trusted professional, you may CLICK HERE to gain a better understanding of our investment planning process.
Disclaimer:
The comments contained herein are a general discussion of certain issues intended as general information only and should not be relied upon as investment, financial, legal, accounting or tax advice. Please obtain independent professional advice, in the context of your particular circumstances. This newsletter was written, designed and produced by Samuel Li for the benefit of Samuel who is Advisors at : SamuelConsultant.com is a registered trade name with Investia Financial Services Inc., and does not necessarily reflect the opinion of Investia Financial Services Inc. The information contained in this article comes from sources we believe reliable, but we cannot guarantee its accuracy or reliability. The opinions expressed are based on an analysis and interpretation dating from the date of publication and are subject to change without notice. Furthermore, they do not constitute an offer or solicitation to buy or sell any securities.
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